[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
JAPAN'S CHANGING ROLE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ASIA, THE PACIFIC AND
THE GLOBAL ENVIRONMENT
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JUNE 25, 2009
__________
Serial No. 111-41
__________
Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey
Samoa DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey ELTON GALLEGLY, California
BRAD SHERMAN, California DANA ROHRABACHER, California
ROBERT WEXLER, Florida DONALD A. MANZULLO, Illinois
ELIOT L. ENGEL, New York EDWARD R. ROYCE, California
BILL DELAHUNT, Massachusetts RON PAUL, Texas
GREGORY W. MEEKS, New York JEFF FLAKE, Arizona
DIANE E. WATSON, California MIKE PENCE, Indiana
RUSS CARNAHAN, Missouri JOE WILSON, South Carolina
ALBIO SIRES, New Jersey JOHN BOOZMAN, Arkansas
GERALD E. CONNOLLY, Virginia J. GRESHAM BARRETT, South Carolina
MICHAEL E. McMAHON, New York CONNIE MACK, Florida
JOHN S. TANNER, Tennessee JEFF FORTENBERRY, Nebraska
GENE GREEN, Texas MICHAEL T. McCAUL, Texas
LYNN WOOLSEY, California TED POE, Texas
SHEILA JACKSON LEE, Texas BOB INGLIS, South Carolina
BARBARA LEE, California GUS BILIRAKIS, Florida
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
Richard J. Kessler, Staff Director
Yleem Poblete, Republican Staff Director
------
Subcommittee on Asia, the Pacific and the Global Environment
ENI F.H. FALEOMAVAEGA, American Samoa, Chairman
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
DIANE E. WATSON, California BOB INGLIS, South Carolina
MIKE ROSS, Arkansas DANA ROHRABACHER, California
BRAD SHERMAN, California EDWARD R. ROYCE, California
ELIOT L. ENGEL, New York JEFF FLAKE, Arizona
GREGORY W. MEEKS, New York
Lisa Williams, Subcommittee Staff Director
Daniel Bob, Subcommittee Professional Staff Member
Nien Su, Republican Professional Staff Member
Vili Lei, Staff Associate
C O N T E N T S
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Page
WITNESSES
Joseph Nye, Jr., Ph.D., University Distinguished Service
Professor, Sultan of Oman Professor of International Relations,
Harvard University (former Dean of the John F. Kennedy School
of Government)................................................. 11
Michael J. Green, Ph.D., Senior Adviser and Japan Chair, Center
for Strategic and International Studies, Associate Professor,
Georgetown University School of Foreign Service................ 22
Kent Calder, Ph.D., Director, Edwin O. Reischauer Center for East
Asian Studies, Director, Japan Studies, Johns Hopkins
University..................................................... 30
Arthur J. Alexander, Ph.D., Adjunct Professor of Asian Studies
and Economics, Georgetown University (former President of the
Japan Economic Institute)...................................... 48
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Eni F.H. Faleomavaega, a Representative in Congress
from American Samoa, and Chairman, Subcommittee on Asia, the
Pacific and the Global Environment: Prepared statement......... 5
Joseph Nye, Jr., Ph.D.: Prepared statement....................... 15
Michael J. Green, Ph.D.: Prepared statement...................... 25
Kent Calder, Ph.D.: Prepared statement........................... 33
Arthur J. Alexander, Ph.D.: Prepared statement................... 51
APPENDIX
Hearing notice................................................... 90
Hearing minutes.................................................. 91
The Honorable Donald A. Manzullo, a Representative in Congress
from the State of Illinois: Prepared statement................. 92
JAPAN'S CHANGING ROLE
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THURSDAY, JUNE 25, 2009
House of Representatives,
Subcommittee on Asia, the Pacific
and the Global Environment,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:06 a.m. in
room 2200, Rayburn House Office Building, Hon. Eni F. H.
Faleomavaega (chairman of the subcommittee) presiding.
Mr. Faleomavaega. The subcommittee hearing will come to
order. This is the hearing by the House Foreign Affairs
Subcommittee on Asia, the Pacific and the Global Environment.
We are discussing today the subject of Japan's changing role
not only in the region but as a global player in the Asia
Pacific and certainly in other regions of the world as well.
I will introduce our distinguished members of the panel,
but before doing so I am going to have an opening statement. I
know my distinguished ranking member, the gentleman from
Illinois, Mr. Manzullo, will join us at a later time. But I
will begin this hearing with my opening statement.
Japan remains America's most important ally in the Asia
Pacific region, currently is the world's second largest
economy, and home to many of the world's best companies and
most advanced technologies. The country's importance to the
United States was underscored by Secretary of State Hillary
Clinton when she made Tokyo her first overseas stop, and by
President Obama when he accorded Prime Minister Aso the
administration's first official visit by a foreign leader.
During the Prime Minister's visit, and echoing earlier
comments by Secretary Clinton at her confirmation, the
President said, and I quote: ``The alliance that we have is the
cornerstone of security in East Asia. It is one that my
administration wants to strengthen.'' Despite such sentiments,
however, Japan receives scant attention from the rest of the
executive branch and Capitol Hill--perhaps with the exception
of this subcommittee.
To a degree, Japan's low profile can be viewed positively.
After all, it was not so long ago that Japan repeatedly made
the headlines for its so called unfair trade practices and its
alleged threats to United States interests and economic
preeminence. You might say also that at the time if we were not
bashing the Japanese we were bashing the Chinese, probably
because of our own shortcomings in our own economic
development.
There is a perception by some pundits and experts that
Japan's role seems to have diminished regionally and globally.
Japan's stagnant economy and politics--especially when
contrasted with China's vibrant growth, growing confidence in
the world stage and military modernization, in my view--
contribute greatly to this perception.
Indeed, Beijing has become ever more central to Washington
debates on key problems confronting this country, from the
global financial crisis to climate change, and from North
Korea's provocations to Pakistan's instability and the current
crisis even in Darfur, Sudan.
To address these and other issues, the Obama administration
has announced it will hold its first Cabinet-level strategic
and economic dialogue with China at the end of next month. S&ED
is probably an acronym that we are going to be learning more
about. As a successor to a Bush administration initiative, the
S&ED will provide an ongoing channel for talks between
officials at the highest levels, from President Obama and
President Hu Jintao, Secretary of State Clinton and State
Consular Dai, Treasury Secretary Geithner and Vice Premier
Wang, to a host of other senior officials.
The regularity of the S&ED and the high levels of its
participants coupled with China's dynamism will keep the United
States-China relationship in the forefront. Let me note here
that sometime next month this subcommittee plans to hold a
hearing on the S&ED. Japan's struggle to define its role
reflects the real, immediate and consequential challenges it
faces. Japan today is one of the world's oldest countries, with
those over 65 years of age exceeding 21 percent of that
country's population. It is estimated that by the year 2050 the
number of elderly people in Japan will be well over 40 percent
of that country's population.
In response to its demographic and economic challenges, as
well as other problems, Japan has been searching for answers.
In 2003, for example, then Chief Cabinet Secretary and
subsequently Prime Minister, Yasuo Fukuda, commissioned a major
Japanese think tank to assess how the country should adjust to
its decline to so called middle power status. Now, I have no
doubt that Japan will remain a critical ally of the United
States and an important global player despite the challenges
she is now confronting.
Of course, Japan can take some obvious steps to minimize
its demographic problems. I suspect, however, that one such
step--Tokyo opening itself to a large influx of immigrants--may
never be an acceptable option. Another, promoting larger
families, has been attempted, albeit modestly, by the
government, but has achieved no discernable results. Providing
women greater opportunities in the workplace would increase the
country's labor force, but efforts to make the significant
social changes necessary to have a real impact in this area
have never gained requisite traction.
A couple of other observations that may be worth noting are
that the number of Japanese students studying in the United
States declined from 45,000 in the 1994-95 academic year, to
35,000 in the 2006-07 year, even as the numbers from other
countries increased tremendously. For example, there are now
more than 85,000 students studying here in the United States
from India, 70,000 students from China, and some 70,000 also
from South Korea.
I might also note with interest that we have approximately
500,000 foreign students studying here in American colleges and
universities, probably the largest contingent of foreign
students of any country in the world studying in our colleges
and universities. I am glad that we are doing a lot better in
the way that we have provided student visas so that students
from all over the world will be welcome to come and study here
in our universities.
Security ties between Japan and the United States, of
course, remain close, and they have been revitalized over the
years partly as a result of the work of some of our witnesses
today. In a welcome development, last month, Japan's ambassador
to the United States offered the Government of Japan's first
apology over the Bataan Death March.
That is a significant development given the fact that
during World War II, in 1942, some 68,000 Filipinos and some
12,000 American soldiers were put on a forced march by Japanese
soldiers, and tremendous amounts of brutalities and atrocities
were committed against them. I was happy to learn that the
ambassador of Japan made this formal apology in front of the 73
survivors of the Bataan Death March in the ceremony.
Meanwhile, prudence on the part of Tokyo and close
cooperation with the United States are absolutely essential as
Japan responds to North Korea's provocations and growing
concerns over China's growing prominence economically as well
as in terms of security.
Yet in a major break from previous taboos, there are open
discussions now in Japan about nuclear weapons. After the first
North Korean nuclear test in 2006, some senior Japanese
politicians, including the current Prime Minister by the way,
called for a reconsideration of Japan's traditional policy of
non-nuclear development. In other words, because of the
problems in North Korea, there seems to be a threat to Japan's
security and expressions of concern that perhaps maybe Japan
needs to also develop a nuclear capability.
Most observers in the United States believe our extended
deterrence makes it highly unlikely that Tokyo will produce its
own nuclear weapons. As the Congressional Research Service
recently noted, Tokyo currently does not have ``the expertise
in bomb design, reliable delivery vehicles, and an intelligence
program to protect and conceal assets and sites for nuclear
testing.'' My quote, however, is, ``it doesn't mean Japan
doesn't have the capacity to produce nuclear weapons if it
seeks to do so.'' And, of course, this will cause a complete
shift in regional military strategic issues affecting the whole
region in the Asia Pacific, especially toward China.
South Korea, China and Russia are not nearly so sanguine,
however. Last month, for example, the Chosun Ilbo, South
Korea's largest daily newspaper, ran an editorial calling on
Seoul to develop its own nuclear capability. Ostensibly, North
Korea's nuclear tests prompted the editorial, but the clear
subtext was concern over Japan's nuclear ambitions.
On June 9th, Russia's Interfax News reported that a Russian
Foreign Ministry source anonymously discussed North Korea's
nuclear test and Japan's response. He said this: ``Naturally we
are getting worried about a certain trend in Japan where there
are increasingly loud voices calling for a building up of the
country's own potential at an accelerated pace.'' Interfax
noted that the official was referring specifically to nuclear
weapons.
And in a semi-monthly journal published under the auspices
of the Chinese Ministry of Foreign Affairs, a featured article
said, ``Some people believe that the Democratic People's
Republic of Korea's possession of nukes will trigger a nuclear
arms race with Japan and then the Republic of Korea following.
If that is so, East Asia will become one of the regions most
threatened with nuclear war.''
Chinese, Russian and South Korean concerns about Japan's
nuclear ambitions may well be overstated. But sometimes
perceptions play a crucial role in policy decisions.
In any case, the challenges Japan faces due to North
Korea's provocations and the trajectory of its population and
economy are clear and daunting. Japan has had a divided
government since 2007, with the Democratic Party of Japan
controlling the Upper House and the Liberal Democratic Party
controlling the Lower House--thus requiring a two-thirds vote
in the House of Representatives to override opposition by the
House of Councillors on controversial pieces of legislation.
Moreover, Japan's bureaucracy seems to have lost its way,
and few, if any, politicians of either party have demonstrated
any ability to successfully lead Japan in meeting current
challenges.
Nevertheless, Japan will likely hold general elections by
this September. With the Aso Cabinet's approval rating at 20
percent and published support for the DPJ, or the Democratic
Party, ahead of the Liberal Party by 10-20 percent, depending
on the pollster you talk to, the ruling party faces the real
prospect of losing control of the government for only the
second time in post-war history.
How the DPJ might govern, especially on foreign policy
remains an open question. DPJ's draft 2009 policy statement,
which will form the basis for its campaign pledges, will
include ``proposals that may give rise to friction between
Japan and the United States. It calls for a drastic review of
the Status of Forces Agreement and a withdrawal of the Maritime
Self Defense Force from its mission in the Indian Ocean,''
according to the Asahi Shimbun.
That said, predicting what policies the Democratic Party of
Japan would actually implement if in power is particularly
difficult since the Democratic Party's Diet members cover the
spectrum from former socialists to former conservative LDP
members.
In previous periods of Japanese history, when faced with
the enormous challenges of catching up with the West or
rebuilding Japan's war-torn nation, Tokyo rose to the occasion
by forging a durable consensus on how to respond. Forging
consensus regarding the construction of a modern state or
rebuilding after war, however, is likely far easier than
reaching broad agreement on accommodating relative economic and
real demographic declines.
I believe the U.S.-Japan alliance should remain a pillar as
strong as ever, and I sincerely hope that Japan will rise to
the challenges it faces by drawing on the country's inherent
strengths. Whether that is likely and how Japan can define its
changing role are the subjects of today's hearing.
[The prepared statement of Mr. Faleomavaega
follows:]Faleomavaega statement--Note: Replaced with
new version e-mailed 11/2/09 deg.
Mr. Faleomavaega. I want to note with interest that we have
a panel of some very distinguished scholars and former leaders
who have worked in previous administrations, and at this time I
would like to introduce our distinguished members of the panel.
We have with us Dr. Joseph Nye, the university distinguished
service professor and former dean of the Kennedy School of
Government at Harvard University. He received his bachelor's
degree summa cum laude from Princeton University in 1958, did
postgraduate studies at Oxford University on a Rhodes
Scholarship, and has a doctorate in political science from
Harvard University.
He joined the Harvard faculty in 1964, and last year, a
poll of 2,700 international relations scholars listed him as
one of the six most influential of the past 20 years, and the
most influential in American foreign policy. It's a tremendous
honor and opportunity for this subcommittee to host you,
Professor Nye. He's an author of several books and has written
well over 150 articles in just about every noted national
magazine, and of course our national newspapers. He is a fellow
in the American Academy of Arts and Sciences, the British
Academy, American Academy of Diplomacy, and just a whole range
of things. Welcome, Professor Nye.
Michael Green is a senior advisor and holds the Japan chair
at the Center for Strategic and International Studies, as well
as being an associate professor of international relations at
Georgetown University. He served as Special Assistant to the
President for national security affairs and senior director for
Asian affairs on the National Security Council from January
2004 to December 2005.
He joined the National Security Council in 2001
specializing in Asian affairs, responsible for Japan, Korea,
Australia and New Zealand. Assistant professor of Asian studies
at Johns Hopkins University. Received his bachelor's degree
from Kenyon College with highest honors, received his master's
and doctorate from the Johns Hopkins University, and did
graduate work at Tokyo University on a Fulbright, and a whole
wealth of experience I must say.
Mr. Calder currently is the director of the Edwin
Reischauer Center for East Asian Studies at SAIS. Received his
bachelor's degree with honors from the University of Utah, both
his master's and doctorate from Harvard University. Expertise
on Japan's domestic politics and Asia Pacific security
relations, and Japan's political economy. Of course, he also
published a lot, articles both in periodicals and newspapers,
and also several books. Also was special advisor to the U.S.
Ambassador to Japan, advisor to the Assistant Secretary for
East Asian Affairs, including Korea. And I think I will stop at
that.
Arthur Alexander's experience includes 10 years as
president of the Japan Economic Institute, specializing in
Japanese economics. Was a staff member at the Rand Corporation,
advisor and consultant to a wide range of industry and
government clients, teaching in major universities, and
publications in academic journals, magazines and newspapers.
His most recent books on the Japanese economy include, ``In the
Shadow of the Miracle and the Arc of Japan's Economic
Development.''
Dr. Alexander joined the Japan Economic Institute as
president in 1990. He has conducted research directly for the
American and Japanese Governments and the World Bank and
private companies. Graduated from MIT, or the Massachusetts
Institute of Technology, with a degree in engineering and
industrial management. Had a stint with the U.S. Army. He then
received his master's degree in economics from the London
School of Economics and his doctorate from the Johns Hopkins
University.
Gentlemen, I really appreciate your presence, and I am sure
that my colleagues will be joining me shortly. As you know we
have had some very interesting votes in the past couple of
days. We haven't reached 100 votes yet, but we will be getting
there between now and tomorrow. But I would like to have our
panel now offer their statements. And by the way, without
objection, all of your statements will be made part of the
record. So maybe we could start with Professor Nye.
STATEMENT OF JOSEPH NYE, JR., PH.D., UNIVERSITY DISTINGUISHED
SERVICE PROFESSOR, SULTAN OF OMAN PROFESSOR OF INTERNATIONAL
RELATIONS, HARVARD UNIVERSITY (FORMER DEAN OF THE JOHN F.
KENNEDY SCHOOL OF GOVERNMENT)
Mr. Nye. Thank you, Mr. Chairman. As you know, next year
marks the 50th anniversary of the U.S.-Japan security treaty
that has been a central feature of stability in East Asia for
half a century. And the current domestic political uncertainty
and realignment in Japanese politics that you describe could
last for several years and cause friction in the alliance.
Indeed, some people might even ask if this could be the
beginning of the end of the alliance. I think not. In fact if
one looks back and compares the situation today with 15 years
ago, the alliance is stronger rather than weaker. As you
mentioned, in the early 1990s many Americans regarded Japan as
an economic threat, many Japanese considered a United Nations
rather than a United States-centered approach as an alternative
to their national security. Some people in both countries saw
the security alliance as a Cold War relic to be discarded.
These trends were reversed by the Clinton administration's
1995 East Asian Strategy Report, which invited China's
participation in international affairs but hedged against
uncertainty by reinforcing our alliance with Japan. In 1996,
the Clinton-Hashimoto declaration stated that the U.S.-Japan
security alliance was the foundation for stability that would
allow growing prosperity in a post-Cold War East Asia. As I
said when I was then serving in the Pentagon, we wish to see a
stable triangle with good relations on all three sides between
the United States, Japan, and China. But the triangle would not
be equilateral because our relationship with Japan rested on
alliance.
That approach has continued on a bipartisan basis in the
United States, and despite electoral maneuvering, polls show
that it still has broad acceptance in Japan. Most close
observers of the relationship agree that the U.S.-Japan
alliance is in much better shape now than it was 15 years ago.
Nonetheless, the alliance faces three major challenges in a new
external environment that could create problems in the next few
years.
One is the violation by North Korea of its promises and its
withdrawal from the nonproliferation treaty and now from the
Six-Party Talks. Second is China's economic growth at over 10
percent per year, slowing to 6 or 7 percent in the current
crisis, but its even more rapid growth in military expenditures
of nearly 17 percent a year. Third is the rise of new range of
transnational threats to vital national interests such as
climate change and pandemics.
Let me describe briefly each of these in turn. North
Korea's recent behavior has been clever, deceptive, and
outrageous. It has violated its agreements, realizing that
China, the country with the greatest potential leverage, is
concerned about the potential collapse of North Korea regime
and chaos on its borders. Call that the power of the weak. At
the same time, Pyongyang realizes that the United States and
Japan are not well placed to use force against it.
Japan is concerned that it not be subject to nuclear
blackmail from North Korea or China, and relies on the American
extended nuclear deterrent. Ironically, Japan is internally
torn between its desire to see a non-nuclear world, and thus
its endorsement of that objective, and the concern of the
defense experts that if the United States decreases its nuclear
forces to parity with China the credibility of American
extended deterrence will be weakened and Japan will suffer the
consequences.
It is a mistake, however, to believe that extended
deterrence depends on parity in numbers of nuclear weapons.
Rather, it depends on a combination of capability and
credibility. During the Cold War, the United States was able to
defend Berlin because our promise to do so was made credible by
the high stakes, the NATO alliance, and the presence of
American troops, that made the coupling of a Soviet attack from
American casualties impossible.
The best guarantee of American extended deterrence for
Japan remains the presence of nearly 50,000 American troops,
which Japan helps to maintain with generous host nation
support. Credibility is also enhanced by joint projects like
the development of regional ballistic missile defense. Equally
important are American actions that show the high priority we
give to the alliance and the guarantees that we will not engage
in what Japan fears will be Japan passing in our relations with
Asia. That is why it is so important that the Secretary of
State Clinton's first trip, as you mentioned, was to Asia, and
the first stop in Japan. It is also why it is mistaken to speak
of a formal G2 with China rather than multilateral cooperation.
The second point I want to address is the dramatic rise of
the Chinese power. The Chinese economy has provided an
important trade partner for Japan, but the concurrent growth of
Chinese power makes Japan nervous. When we were renegotiating
the U.S.-Japan security alliance in the 1990s, Japanese leaders
would sometimes privately ask me if the United States would
desert Japan in favor of China. I responded then, and continue
to hold the belief today, that there is little prospect of such
a reverse of alliances for at least two reasons. First, China
poses a potential threat while Japan does not. Second, we share
democratic values with Japan, and China is not a democracy.
Moreover, China's internal evolution remains uncertain.
While more Chinese are more free today than any time in their
history, political evolution has failed to match economic
progress, and China is far from free. Unlike India, China has
not yet solved the problem of political participation. There is
always a residual danger that China will slip into competitive
nationalism in the face of domestic problems.
At the same time, it is in the interest of the United
States, Japan, and China that China's rise be peaceful and
harmonious, in the words of Chinese leaders. That is why the
strategy of integration plus a hedge against uncertainty makes
sense for both the United States and Japan. In the words of
Robert Zoellick, now World Bank President, it is in our
interest to welcome the rise of China as a responsible
stakeholder.
If by some mishap, China does turn aggressive, we will find
that Asia contains other countries, such as India, Australia,
as well as Japan, that would balance its power. But it would be
a mistake to turn to containment under current circumstances.
As I have said over many years, if we treat China as an enemy,
we guarantee enmity. Integration plus a hedge against
uncertainty is a better approach. Indeed, there are strong
grounds for the United States, Japan, and China to engage in
areas of trilateral and other region cooperation.
The third problem or challenge I want to address is the
challenge of new sets of transnational problems such as health
pandemics, terrorism, and outflows from failed states. But
chief among these challenges is the damage that can be wreaked
by global warming, where China has now surpassed the United
States as the leader overall, but not per capita, as a producer
of carbon dioxide. Fortunately, this is an area that plays to
Japan's strengths.
Some Japanese complain about the unequal nature of our
alliance in the traditional security field because of the
limits that Japan has accepted on the use of force. But in
these new areas, Japan is a more equal partner. Japanese
overseas development assistance in places ranging from Africa
to Afghanistan, Japanese participation in global health
projects, Japanese support of the United Nations, Japanese
naval participation in anti-piracy operations, and Japanese
research and development of more efficient uses of energy are
all at the forefront in dealing with these new transnational
challenges.
In April, Prime Minister Taro Aso outlined three goals in
what he called Japan's strategy--future. One, Japan should
devote to use its technologies to lead the world in a low-
carbon emission revolution. Two, Japan should be a global
partner in creating a society of vitality, good health, and
longevity. And three, Japan should exercise its soft power.
Others such as Asahi Shimbun editor Yoichi Funubashi have
called for a strategy in which Japan becomes a global civilian
power.
Fortunately, these attitudes fit closely with the
priorities that have been articulated by the Obama
administration. In conclusion, it is important that the United
States and Japan, the world's two largest economies, not turn
inward at a time of crisis. Even though domestic political
realignment in Japan may cause a period of minor frictions in
the traditional security agenda, our common interest is
overwhelming, and the alliance is likely to prosper unless we
handle things very poorly.
This will require greater patience and even closer
consultation between Washington and Tokyo than in the past. On
the new agenda there is enormous potential for an equal
partnership working with others in the provision of global
public goods that will be good for the United States, good for
Japan, and good for the rest of the world. In short, I am
optimistic about the future of the U.S.-Japan alliance. Thank
you.
[The prepared statement of Mr. Nye follows:]Joseph
Nye deg.
Mr. Faleomavaega. Thank you, Professor. Before we hear from
Dr. Green, I would like to acknowledge the presence of one of
our senior members of the Foreign Affairs Committee, my good
friend, the gentleman from California, and I would like to ask
him if he has an opening statement that he would like to make.
Mr. Rohrabacher. Is this microphone on? I guess it is. I
will make this very brief. I apologize for being late, two
hearings at the same exact moment, one on Afghanistan, one on
Japan, and so you can imagine that this is back and forth.
Mr. Faleomavaega. Well, we appreciate your coming.
Mr. Rohrabacher. I was down at the Afghan hearing. Let me
just note that I lived in Japan as a young boy. I was 9 years
old, I lived there with my father who was a Marine pilot, flew
out of Ivukuni, and I traveled throughout Japan. And at that
time Japan was just a poverty stricken country and people were
basically living in the rubble of World War II, that was back
in the mid-1950s. Japan has since built itself up into a world
power again, as they were before the Second World War.
And I think that none of us should ever ignore the fact
that this was such a huge accomplishment for these people, to
have taken a country that was totally destroyed in the mid-
1940s, and build an economy that is just a shining example of
enterprise and productivity to the entire world. What
unfortunately I think has happened, the Japanese while just
absolutely committed to being friends with the United States
and never going through this type of horrible war that they
had, that the Japanese have become totally so committed that
they have been taken for granted by the United States.
Their prosperity has been taken for granted, and the fact
that every time we get involved in a problem, although they are
not providing military support, Japan is the number one country
to back up the United States when we are engaged in different
conflicts and different projects around the world. And over and
over and over again the Japanese have stood with us, but yet I
think decision makers in Washington take that for granted.
Well, we shouldn't take that for granted and we should make
sure the people of Japan and the Government of Japan knows that
we deeply appreciate their friendship and that we admire them
as a people for what they have done and the incredibly peaceful
job they have done in rebuilding their country and building up
a peaceful force in the world. Because when they get involved,
they basically send aid. They send aid, I remember in Cambodia
right after the Khmer Rouge were thrown out and during the time
period when they had their first election, that was about 20
years ago, the Japanese sent in $1 billion worth of aid to
Cambodia. And it was tremendous.
So with that said, one last note, I think any American
strategy for the future has to be based on a partnership with
Japan, and perhaps with India as well, and perhaps with Russia
as well. And I would hope that we use our good offices to bring
about a better relationship between Russia and Japan, which I
would be very interested in hearing the opinions of the panel
on that. So thank you, Mr. Chairman, I am looking forward to
hearing the rest of the testimony.
Mr. Faleomavaega. I thank the gentleman from California. I
might also note with interest that I too have a tremendous love
and affection for the Japanese people, I guess primarily
because I have a relative who was a sumo wrestler in Japan. He
wrestled under the name Konishiki. And you probably have heard
of Konishiki. He only weighed 560 pounds and attained the
second highest ranking as an ozeki. And of course I also knew
other fellow Polynesian sumo wrestlers like Akebono, who became
yokozuna, and also Musashimaru, who also became yokozuna.
Unfortunately, they are not recruiting Polynesian sumo
wrestlers now. They are going to Mongolia now to get sumo
wrestlers. But I hope that maybe in the future we might have a
change. I also want to note that growing up in Hawaii, I have a
tremendous love for Japanese samurai movies. My favorite hero
is Zatoichi, the blind swordsman who can kill 200 people all by
himself. But I just wanted to note that.
Mr. Rohrabacher. Mr. Chairman, if you would indulge me for
one moment, I would have to admit that Godzilla is my favorite
Japanese character, but it is more important than that in terms
of the culture that we are talking about that I would like to
brag about the many Japanese surfers that are surfing in
California. We actually have more sushi chefs in California
than they do in Japan, and they all come to my district, and
they are sushi chefs at night, which we are grateful for, and
they are surfers during the day.
And they are great surfers I might add as well, Japanese
surfers are terrific. So there are a lot of cultural ties that
bind us together today. But of course our relationship again
goes beyond appreciating that culture and appreciating these
people and their hard work and their striving for excellence,
which is something that I admire deeply. But it goes beyond
that, it goes to the fact that they are incredibly important
partners of the United States, partners that sometimes are
taken for granted.
Mr. Faleomavaega. I thank the gentleman from California.
And in another note of interest, just last week a special
ceremony was held in Japan for the retirement of the first
foreign sumo wrestler to have had his own stable, the famous
Hawaiian wrestler Takamiyama Daigoro, who just retired last
week. I tried very hard to go to Japan and to pay my respects
because he was the one who trained all these other Polynesian
sumo wrestlers who followed him.
Takamiyama's American name was Jesse Kuhaulua, a native of
Hawaii, a fellow from Maui. But at any rate, I am sorry, I
didn't mean to digress, but I just wanted to let the panel know
we know something about Japan besides Aikido and Karate.
Professor Green, please.
STATEMENT OF MICHAEL J. GREEN, PH.D., SENIOR ADVISER AND JAPAN
CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES,
ASSOCIATE PROFESSOR, GEORGETOWN UNIVERSITY SCHOOL OF FOREIGN
SERVICE
Mr. Green. Thank you, Mr. Chairman. Thank you, Congressman
Rohrabacher. I actually first discovered Japan as a small boy
from my dad who went there as a Marine, and last week I took my
2-year-old son for the first time to Japan, and we went to a
sumo beya, and since we have been back he has been crouching
around the house trying to wrestle the dogs. My wife and I are
unsure now whether he is going to be a Marine, a professor, or
a sumo wrestler when he grows up, maybe all three.
I appreciate what Congressman Rohrabacher said about the
importance of Japan, the impressive accomplishments of Japan.
Polling data in the U.S. suggests the American public gets it.
The most recent poll, about 2 weeks old, shows 80 percent of
Americans say Japan is a reliable ally. That is right up there
toward Australia, Britain, and much longer standing alliance
relationships, and really quite remarkable considering that 20
years ago those polls had the American public more afraid of
Japan than of Soviet nuclear weapons. So we have come a long
way in 20 years.
And in Japan, 78 percent of the Japanese in a recent poll
said that the alliance with us is important to them, which is
the highest number in three decades. So the public gets it. I
think they get it because of common values and interests, and
they get it because the rise of Chinese power for both of us
makes this alliance more important, not less important. One
more reason I think we are in strong shape is because we have
had bipartisan support and efforts to strengthen this alliance.
Enormous credit should go to Joe Nye, who as Assistant
Secretary in the mid-90s started this process of revitalizing
the alliance.
When I was in the Bush administration, 5 years in the NFC,
we very self consciously modeled what we did on that start, and
I am pleased to see that Secretary Clinton and the State
Department are continuing that bipartisan tradition of
strengthening the alliance at a time of uncertainty in the
region. All of that said, there are a lot of voices out there
arguing that Japan is a wasting asset, that perhaps we should
stop asking so much of Japan, maybe Japan should just be a
middle power, whatever that is.
And I would argue this is not the time to be lowering our
ambitions or dialing down our sense of the strategic importance
of Japan, and in my brief comments I want to try to highlight
some of the strengths that are apparent in Japan's world role,
in spite of the many complications that the chairman talked
about in economics, in security, and in what we might call soft
power.
In the economy, the numbers are dire. I expect Arthur
Alexander will go through some of them. Exports in February
were down almost 50 percent from the year before. GDP growth
figures for the first quarter of 2008 were the worst in 35
years, and Japan has a debt-to-GDP ratio of 170 percent. That
is pretty bad news, and compared to where Japan was 10 or 20
years ago, it is delicious headlines for the press to describe
how the mighty have fallen.
But I think you need to peel beneath that and look at some
of the core strengths. For example, Toyota still has cash
reserves of $34 billion, and that is after posting a loss.
Their new Prius which went on sale last month has 180,000
orders, that is 18 times what they originally projected for the
first month. Sharp, which makes liquid crystal displays, opened
a new factory, and in the midst of this recession they still
can't keep up with all the demand. Robotics in Japan, the
market is expected to grow to $30 billion by next year and to
double every decade after that.
So there are problems to be sure, but there are some real
core strengths, especially in technology, that make Japan a
valuable ally and player in the world. And the issue of debt is
also important to put in perspective: $170 billion debt-to-GDP,
we are heading in that direction ourselves, but in Japan's
case, the vast majority of that is bond debt issued to the
Japanese people. In terms of external debt, they rank much,
much lower.
On the security side, as the chairman noted, the diet is a
mess, the political realignment process as Professor Nye said
could take years, there is an election coming up this summer. I
could spend 20 minutes spelling out for you the scenarios; we
don't know what a Democratic Party would actually do, would it
follow through on its pledges to have a review of our Status of
Forces Agreement? I doubt it. But how they get out of those
campaign pledges will be messy.
Even if the LDP wins, they will lose the two thirds
majority they have needed in the lower house to push bills
through, so they are going to be on weak ice, and there is a
very good chance we will need to have another election in a
year to sort this all out. But if you look at what Japan is
doing on the ground in security, there are some very impressive
and unprecedented developments.
In March, Japan stood up the first joint operational
command under a three-star Air Force general to deal with
potential incoming North Korean missiles. He had authority to
shoot, he didn't have to go to the diet, t deg.he
didn't have to go to the Prime Minister, first time ever. And
then in April the Japanese set up the first joint operational
command overseas, this time in Djibouti to assist with anti-
piracy operations.
And just last week the diet passed a bill which allows the
Japanese ships to fire on pirates, not only to protect their
own ships but to protect third country ships, which close
observers see as a very important step toward what we call
collective defense, which would mean that Japan could actually
do a lot more in a coalition with Australia or with us. And all
of this is happening in spite of the confusion in the diet.
Finally, there is a lot of discussion, and maybe we will
get into it, about Japan's difficult problems on history, not
only the Bataan Death March but issues with China, with Korea.
It is difficult, there is no question about it, but it would be
a mistake to argue that because of this Japan is isolated. The
poll numbers are pretty clear, the BBC has surveyed people
around the world every year for 3 years, and they have asked,
What country do you respect the most in the world? Japan has
come in first or tied for first every year.
Recently there was a poll on the soft power, the Chicago
Council on Global Affairs took Joe Nye's concept and found a
way to measure in Asia, you know, how much influence countries
have diplomatically, culturally, economically. We won, we came
in first in every category, the United States, and Japan came
in second across the region. So there are some real core
sources of good will for Japan, not only around the world but
in Asia, despite the difficulties over history.
As a whole, what this says to me is, Don't underestimate
Japan. Don't do what we did 20 years ago when we thought Japan
would overtake the United States and become an enemy, don't now
underestimate them. There are enormous potential sources of
power and influence that will continue to make Japan an
important partner. We need to take Japan seriously, we need to
keep building our alliance and keep expectations high, because
that is how we are going to continue building on the successes
that began with Joe Nye and have continued for three
generations. Thank you.
[The prepared statement of Mr. Green
follows:]Michael Green deg.
Mr. Faleomavaega. Thank you. Dr. Calder.
Mr. Calder. Thank you very much, Mr. Chairman. Your talk
about Akebono really rang a bell. When I was working with
Ambassador Foley we actually helped with arranging the details
on his wedding, which was really quite something and occurred
while I was in the Embassy.
Mr. Faleomavaega. You mentioned Akebono, I was at
Konishiki's marriage when he got married. And the entire
country was watching this very unique wedding. I think the cake
was bigger than this whole table you have got there.
Mr. Calder. It was certainly big for Akebono too.
Mr. Faleomavaega. Well, he was only 6 foot 8, weighed 450
pounds, you know. So I know what you mean, Professor Calder.
Mr. Calder. Those sumo weddings really are something. I
should also say, Congressman Rohrabacher, what you were saying
about Japan in the 1950s rang a bell. I was there briefly as a
kid in the 1950s as well. My father had been in the Navy, not
in the Marines, but I remember those days, and of course a lot
of the bases around Japan also.
Mr. Rohrabacher. That was when Kobe steak cost $1.50.
Mr. Calder. There has been a little bit of change, hasn't
there?
STATEMENT OF KENT CALDER, PH.D., DIRECTOR, EDWIN O. REISCHAUER
CENTER FOR EAST ASIAN STUDIES, DIRECTOR, JAPAN STUDIES, JOHNS
HOPKINS UNIVERSITY
Mr. Calder. I would like to just summarize my remarks in
the interest of time, and highlight about five points relating
to the politics, particularly that people haven't talked about
as much. The first point, which really strikes me graphically
in light of what you have said and what I remember, is that
Japan is not static. To the contrary, it is changing, it is
changing in policy terms and it is changing in political terms
as well.
On the policy side, to look to the bright side of some of
that, I think we have to look at things like energy efficiency.
And since the Oil Shocks of the 1970s Japan has increased its
efficiency unit of GDP by about 30 percent, which is something
of course that could well be very relevant to us today. In
terms of defense responsibilities, Professor Nye and my
colleague Mike Green have also alluded to this, but I think we
have to remember the tremendous distance that we have come
since the Nye initiatives of the 1990s, the guidelines, and
then also after 2000 as well, after the 9/11 of course the way
Japan responded.
Today, I remember when I was a student one just really
couldn't imagine the idea of Japan at the Straits of Malacca or
any Japanese responsibilities. As you may remember in the early
1980s there was a tremendous controversy about the 1,000-mile
perimeter. And of course not only are they at the Straits of
Malacca, the Marine Self Defense forces are in the Arabian Sea,
U.N. peacekeepers on the Golan Heights. So there has been a
very substantial change there.
Japan, while changing already in policy terms, is also I
would argue on the verge of potentially historic and
transforming political change. As Mike suggested, of course
there is a good deal that we can't really tell for sure, but
Japan has to hold one general election by mid-October for which
most polls assign a plurality to the largest opposition party
at this point.
Japan will also hold a second scheduled election around
July 25th of next year for the Upper House, the House of
Councillors, and many people predict there could well be a dual
election, a double election, at that point. It may take several
elections to sort this out, but the political scene potentially
is dynamic as well. My assessment would be that, and I am sure
we will get into this in the discussion, that political change
and policy changes relating to it will be protracted. The
sorting things out will take at least 1 year and possibly
longer.
Another point that hasn't been made that I think is
crucial, it cuts perhaps in a slightly different direction than
what we have heard, is that change is being driven in Japan by
rather powerful global forces and also regional forces. Many of
them in the economy, and Arthur Alexander I am sure will speak
to this, but globally of course China and India are the big
beneficiaries of globalization. The impact on Japan of
globalization has been more mixed. Both of those countries, and
Korea as well which has also been rising or in the same
neighborhood, there are changing regional dynamics.
The process of change regionally since 2006, Japan's trade
with China has been larger than its trade with the United
States. The economic context is in some ways shifting
significantly, although one area where our ties of course
remain very, very strong is technology, and of course as has
been said on the security side as well. Now, this process of
change I think will generate a new sort of policy process in
Japan, probably more open and transparent yet also less
predictable, and these things have policy implications that I
think, obviously there is much that is uncertain, but I think
need to be considered.
Obviously we have to take crises as they come. Responses to
financial crises won't wait, and responses to North Korea
should not wait. And in many crises Japan's record has been
good. On the economic side in '73, for example, the energy
crisis, in several of the financial crises, since 9/11 in many
respects on the security side. Of course there have been, even
in the Gulf War they didn't change their security orientation
sharply in terms of deployments, but they did contribute $13
billion.
Longer term, I think the imperative, flowing from what I
have said about a protracted period of time, is a need to be
attentive and patient with a relatively long time horizon. I
wouldn't be overly optimistic. I wouldn't contradict much of
what was just said about positive views on both sides. I do
think the crucial point though is that globalization and the
rise of alternatives, sharply different from the pattern that
we had in the 1950s when Japan and the United States were
basically alone as major powers in the Pacific and Korea was in
turmoil and China was under embargo, the world is sharply
different.
There are different pulls, which will mean a more proactive
and a more attentive sort of process. I think that probably
means the symbolic element is important, cultural relations,
more American centers, there is no NDFL for the Japanese
language, as I understand it, now. We have it for Chinese and
Korean but not Japanese. Mr. Chairman, you pointed out the
decline of foreign study; it seems to me on both sides of the
Pacific something has to be done about that.
And then finally, in terms of functional cooperation in the
areas that would balance the playing field that would create
some degree of symmetry, energy efficiency, the environment,
possibly mass transit, and certain areas of vocational
education. There are many areas where we can share ideas, both
at the public level, domestic policy dialogue, but also track
two or track one and a half. So in conclusion, I think we have
to see the potentially problematic element. We have to see that
the U.S.-Japan relationship and Japan itself are changing, and
that we have to be attentive in responding to that change.
Thank you.
[The prepared statement of Mr. Calder
follows:]Kent Calder deg.
Mr. Faleomavaega. Thank you, Dr. Calder.
Dr. Alexander.
STATEMENT OF ARTHUR J. ALEXANDER, PH.D., ADJUNCT PROFESSOR OF
ASIAN STUDIES AND ECONOMICS, GEORGETOWN UNIVERSITY (FORMER
PRESIDENT OF THE JAPAN ECONOMIC INSTITUTE)
Mr. Alexander. Yes, batting clean up here, I think I am
going to be actually supporting, reinforcing some of the points
that have already been made. The first one is the point that
Japan is a rich country. As a rich country, it possesses the
habits, the institutions, the policies of successful nations,
and these kinds of institutions that make countries rich do not
vanish, they don't disappear.
So what we can look at for Japan's economic future over the
long run, abstracting away from what is going to happen the
next quarter, is that Japan's economic future ranges from 1-2
percent real growth of GDP per person. Now 1 percent growth
would be a comparative failure, 2 percent, a considerable
achievement. And this in general is the range that rich
countries, including the U.S., operate within over the long
term.
From 2002 to 2008, Japan experienced its longest postwar
expansion building on Chinese and other Asian demand: It wasn't
just China. The share of exports and GDP rose to the highest
level in Japan's entire postwar history, about 18 percent.
However, contrary to many popular views in Japan as well as the
United States, Japan's economy has not generally been driven by
exports either in the post-World War II period or earlier.
Actually quite the reverse is true. Imports rather than exports
are associated with growth and productivity improvements. That
is true in the United States as well.
Last year high energy and materials prices, global
financial turmoil, and collapsing exports plunged the economy
into recession. It deepened in the first quarter of this year
as real GDP fell over 15 percent in annual terms, the steepest
decline since figures were first produced in 1955. However, in
the last 4 months we are beginning to see a turnaround. Excess
inventories are falling, manufacturing output is up, exports
are turning around, consumer confidence is building, and we are
even seeing household buying itself turning up in the latest
data. So things are beginning to look good.
When we turn to the demographic problems, the Japanese
population is becoming older and smaller. Low fertility rates
below the break-even level plus the longest life expectancy in
the world mean that fewer babies are being born, older people
are becoming a larger share of the population. Population
actually peaked about 3 years ago. Current projections put the
2040 numbers 15 percent below what we see today, going back to
the level of Japan's population in 1973.
Japan is not unique here. European nations experience
almost the same sort of low fertility, but Japan is getting
there first. Because of the shifting age structure, the working
age population will fall about 1 percent annually over the next
40 years. Two things can ameliorate the effects of a falling
labor force. First, older people need not stop working at the
age of 65. Actually, higher wages draw people back into the
labor force. Just in the last 4 or 5 years, 0.5 million
Japanese between the ages of 65 and 69 reentered the labor
force because there was a demand for them. If we get labor
shortages in the future, I expect the same thing will happen.
The second thing has been mentioned, which affects the
quality as well as the number of workers, is the better use of
women. They make up a smaller share of the labor force than in
many other advanced countries. The ratio of female to male
wages is the lowest in the developed world. The proportion of
females in management is 8 percent in Japan compared to 45
percent in the United States. As I look around the room and
look around Washington, I see there are probably more
competent, intelligent, hard working Japanese women working
here than in Tokyo. When half the labor force is underutilized,
the potential for greater productivity gains is obvious.
Turning to the regional effects of demographics, and I
think this is my main message, demographics need not be
destiny. Japan will remain the third or fourth largest economy
for the foreseeable future. Although not growing as fast as its
neighbors, it will retain the scale, the resources, the
competencies, the capabilities to engage fully in regional and
global areas. Even though more resources may be devoted to
aging citizens in the future, Japan's role will be dependent
more on its choices and preferences than on its absolute size
or rate of increase.
The size of an economy imposes only the roughest
constraints on military or diplomatic efforts. Many countries
punch well above their economic weight. Just think of North
Korea or Israel. Economics by itself will not constrain Japan's
future roles. Talking about United States and Japan economic
and trade relations, as has been mentioned, when I testified I
think in this very room 20 years ago, the hearings were on the
Japanese threat. A few years later during the Clinton
administration the trade representative could say, we negotiate
and negotiate and nothing happens.
Professor Nye helped end that period as we changed our
relationship, but one of the things that we have seen over the
past 15 years is that many of the industries that suffered
directly from Japanese imports have adjusted to the intense
competition either by getting smaller or becoming more
competitive. Whether in steel, automobiles, machine tools, or
other products, the challenges have faded into the past.
In addition, Japan is no longer the only, or sometimes even
the chief, protagonist. We have Korea, China, Russia, Brazil.
Others have often taken the role that had been played by Japan
in earlier decades. Japan is now the fourth largest source of
American imports, behind Canada, Mexico, and China, accounting
for less than half the flow from either Canada or China. Thus
the salience of Japan in the eyes of business and political
leaders is considerably reduced from earlier decades. The old
animosities and emotions have been replaced by a more
cooperative approach that we have already heard about. And I
think the same thing as far as we can see is continuing under
the current administration.
I was asked to comment on Japan's role in addressing the
global financial crisis. The first thing that is really
remarkable is that Japanese financial institutions have
suffered only mild losses. The losses from derivatives and
subprime assets add up to only about $25 billion. This is
minuscule compared to the losses we have seen in American and
European financial institutions. Because of their lack of
exposure, the financial authorities have not had to bail out
Japanese banks, which have buttressed their capital by raising
funds in financial markets.
Japan has loaned the IMF an additional $100 billion from
foreign exchange reserves to be used to make loans to emerging
markets and other economies. In addition, Japan invested $2
billion in the World Bank to help recapitalize banks in smaller
emerging market economies. In cooperation with other countries
and central banks, they provided currency swaps and other
arrangements for countries that might face shortages of foreign
exchange.
And until last year, Japan was the largest holder of
American Government assets. China has now taken over that role,
but just barely. In recent months Japan has been acquiring
American Government bonds and other securities at a $25-billion
annual rate, about half the flow from 3 years ago when it was
very heavy in the market for Fanny Mae and Freddy Mac assets,
and that no longer is the case.
What is going to be happening to its regional role? And
what will the election do? We have already talked about the
election. I think what we are likely to see, and I fully agree
with my colleagues here, a new party would enter with support
from different constituencies than the current web of political
relations that have been built over half a century. Although
the Democratic Party of Japan would feel bound to support its
own backers, the important thing is they are different from the
old gang.
And I think we are likely to see more deregulation, more
opening, more reform in many of the areas that have been tied
to the Liberal Democratic Party. The other thing is that the
ties to the bureaucracy in the ministries are likely to break
down. This has been one of the major factors that has
restrained change in Japan: The linkage between the Liberal
Democratic Party and government officials. That will be
changing as well.
Can the DPJ bring new leadership? I may be sued here for
practicing political science without a license, but when we
look around Japan we see that there are plenty of reformers
down at the local levels, at the prefecture levels. Prime
Minister Koizumi demonstrated that we could have charismatic
leadership in Japan. I don't think it is going to happen, as
was said, in the short term. But enough change has occurred in
political, economic institutions, and new people, that bold
leadership can emerge from the confusion of a new party, new
people, and new institutions. On the other hand, as economists
like to say, no one has lost money by betting against the
conservative nature of the Japanese people, at least not in the
last 60 years. So the future is up for grabs. Thank you.
[The prepared statement of Mr. Alexander
follows:]Arthur Alexander deg.
Mr. Faleomavaega. Thank you, Dr. Alexander. I have just
been handed a note that Professor Nye has to catch a flight. So
if it is all right with our other three friends, Congressman
Rohrabacher and I will want to focus on a couple of questions
before Professor Nye has to leave for home. So my friend from
California, first questions?
Mr. Rohrabacher. Well, let me just ask this in terms of
Japanese positioning, and this might be good for the whole
panel however, with China versus the United States, I
personally see China as America's greatest potential adversary.
Potential, I mean they are a power we deal with now and perhaps
even an enemy in the future. What do you see in terms of what
is going on with Japan and China? Do you see that the United
States, for example the Chinese just proclaimed a territorial
limits in terms of their offshore territorial limits that seem
to threaten Japan. And maybe you would like to comment on that,
Dr. Nye?
Mr. Nye. When we were looking at the future of East Asia 15
years ago, the most important thing was the rise of China. And
that raised a question which is, how should we deal with the
rise of China? One school of thought said, deg. treat
it as an enemy, try to contain it now. We decided to reject
that on the grounds that that guaranteed that you would have an
enemy.
Mr. Rohrabacher. Right.
Mr. Nye. On the other hand, if we invited China to
participate, for example in the World Trade Organization and
what Bob Zoellick called being a responsible stakeholder on a
range of issues, you weren't guaranteed that China would always
be a friend, but at least you kept open that possibility. So
what you needed was a hedge against uncertainty. Even if
today's generation of Chinese leaders may have good intentions,
who knows in 10 or 20 years what the next generation will be.
So the policy we designed was one in which we reaffirmed
and reinforced the U.S.-Japan security treaty, so that in the
three major powers of East Asia, United States, China, and
Japan, we and Japan would be tightly tied as the two, China
would be the one. That was the hedge against uncertainty.
Subsequently, as Bill Emmott has pointed out in his recent
book, The Rivals, if you look at the rise of Asia not just as
the rise of China but also the rise of India, you find that
there is a balance within Asia.
And the important thing for us is not to contain China or
to treat China as an enemy, but to hedge against the
possibility that at some time in the future we would face what
you described. And that policy, as Mike Green said, has worked
on a bipartisan basis. It has good bipartisan support, and I
think it is the right policy. It gives us the best options for
a better future, and it also is good for Japan. Because if we
have a problem thinking about the rise of Chinese power, Japan
has it immediately, it is right next door.
And that is why I think the U.S.-Japan alliance, despite
the frictions that are bound to occur if we see this political
change that my colleagues have been described, I think that is
not going to threaten the alliance because it is so strongly in
the interests of both Japan and the United States. So this is
why I concluded my testimony by saying I am relatively
optimistic, not just about the U.S.-Japan alliance, but about
the potential for a stable East Asia, if we play our cards
right.
Mr. Rohrabacher. Well thank you very much for your
insights. I have to say that bringing that into focus also with
India I think is really an important understanding that we have
to have if we are going to as you say chart our future, that
hedge against the possible bad outcomes but at the same time
charter a very positive future. Thank you very much.
Mr. Faleomavaega. I just wanted to ask Professor Nye, there
seems to be a correlation on our traditional deterrents closely
tied to our nuclear capabilities, and I wanted to ask you and
maybe even the other members of the panel, is deterrence still
relevant today given the problems of nonproliferation? Or is
there a double standard given that the way the nonproliferation
concept has been employed has not been very successful?
Mr. Nye. Well, having once worked on nonproliferation way
back in the Carter administration, it is worth recalling that
we are not doing quite as badly as the daily headlines would
imply. John F. Kennedy expected there to be 25 countries with
nuclear weapons by the 1970s. There are nine. That is better
than was expected. So the nonproliferation regime, the treaties
and so forth, have had some beneficial effect, though they are
now severely challenged by both North Korea and Iran.
I think the important thing to realize is that there is an
inherent dilemma in nonproliferation, which is that as you
approach zero nuclear weapons, things may become more unstable
rather than more stable, because a little bit of cheating can
go a long way, whereas when you have larger numbers the little
bit of cheating probably doesn't matter as much. And this
raises the following paradox, which is that part of the reason
that there hasn't been more proliferation is because we have
been able to extend guarantees of our nuclear umbrella over
others.
Japan obviously has the capacity to go nuclear if it so
wished. It hasn't felt the need because we have extended
deterrence. So the dilemma is that if we were to go too fast
too hard too close to zero, we would bring nuclear extended
deterrence into question. And I think that is why I said in my
testimony, it is important to focus on the fact that extended
deterrence rest very heavily on credibility, not just
capability. In other words, the fact that there are 50,000
American troops based in Japan is tremendously important just
like the presence of American troops in Berlin allowed us to
defend Berlin in the Cold War in situations when the Soviets
had local superiority.
So I think as we try to implement a policy to which we are
committed under Article 6 of the nonproliferation treaty of
reducing our arsenals and getting to lower numbers, we have to
make sure that we do it in such a way that it doesn't call into
question the credibility of our extended deterrence, because
that paradoxically would actually increase rather than decrease
proliferation.
And that central dilemma is one which is going to require
very close consultation between Washington and Tokyo. We should
not be taking steps whether it is to deal with what I call the
outrageous behavior of North Korea or whether it is to deal
with the implementation of the long term desire to reduce the
numbers of nuclear weapons, we should not be taking these
without very close consultations with Tokyo.
Mr. Rohrabacher. But, and Chairman if you would indulge me,
the missile defense of course is playing an important in what
you have just outlined. And the Japanese I think that you will
agree have been tremendous partners with us in the development
and even actually the deployment of a missile defense system.
Mr. Nye. Absolutely. The joint cooperation we have in
ballistic missile defense with Japan is an important part of
our extended deterrence relationship.
Mr. Faleomavaega. There is also the concern, at least the
perception of the fact that the current administration, as with
the Bush administration, wants to denuclearize North Korea. And
of course this has serious implications toward Japan's own
security. My question is, how do you denuclearize North Korea
when it already has in its possession nuclear bombs?
Mr. Nye. Well, I think the strategy that we need to take
toward North Korea is to realize that this regime is not going
to last forever. That is different from saying that we have a
policy of regime change, I don't think we can change the
regime. I think it will change with time. But we don't have to
accept the legitimacy of the North Koreans having violated
their nonproliferation treaty agreements and exploded two
nuclear devices. And that means we hold open the prospect that
over time there will be a non-nuclear Korean peninsula. We
shouldn't give up that prospect just because the North Koreans
have continually lied to us and violated their agreements.
Mr. Faleomavaega. And I suppose the most serious question
of all is what the Obama administration ultimately will have to
do in making its decision if North Korea does continue not only
to test its nuclear capability but even its missile testing
program. It has come to the point where there has been a lot of
rhetoric, but where do we stop and say enough is enough? And I
suspect that we have to get some kind of a multilateral
agreement, especially with principals like Russia, China and
Japan to say that we are going to have to put a stop to this.
Otherwise, I think we are not going to encourage North Korea
even to do that. And it also has deep implications for Iran's
efforts as well.
Mr. Nye. Well, let me give you a quick answer but then turn
to my colleagues on this since it is a very important point. I
think the administration is right to have tried to maintain the
multilateral framework. I doubt the North Koreans will come
back to the Six-Party Talks, but having five parties talk about
stability in northeast Asia is in itself valuable. Maintaining
a framework where the North Koreans have to antagonize not just
the United States but others is a point in our favor.
In other words, if we think of this as a longer term
process of keeping open the potential of a non-nuclear Korean
peninsula, containing the North Korean threat is I think a
valid objective. And from that perspective, we shouldn't accept
any more of these false promises. We shouldn't negotiate
bilaterally with the North Koreans for the sake of negotiating
and get another scrap of paper which turns out to be worthless.
We should in fact be using U.N. sanctions, which we have
already got some progress on, and a five-party framework to try
to contain the North Korea situation while waiting for
political change inside North Korea. But I would be interested
to see what my colleagues think.
Mr. Faleomavaega. Please.
Mr. Green. Mr. Chairman, we the United States did enormous
damage to the credibility of our extended nuclear deterrent in
Japan in the way we handled North Korea the last 2 years. I
think the Obama administration has corrected course in an
important way. We promised in 2003 publicly that we would not
lift tariffs and sanctions on North Korea unless there was
progress, and these were the exact words in a State Department
and speeches by Secretary of State and others, we promised we
would not lift tariffs and related sanctions on North Korea
unless there was ``progress'' on the issue of Japanese
abductees.
And in October 2008, we unilaterally lifted those
sanctions, there had been absolutely zero progress on
abductees, and we did it in exchange for a verbal pledge from
the North that they would verify what they had done. The
reaction in Japan from left to right was incredibly negative.
Extended nuclear deterrents as a matter of capability where I
think every expert would agree we are in very strong shape with
missile defense, with our other capabilities. As a matter of
credibility, I think the North Koreans have no illusions about
what we would do if they ever used weapons of mass destruction.
But it is also about the credibility of our nuclear
umbrella and the allies who depend on it. And we have a bit of
digging out to do now. Because in the minds of I think many
Japanese strategic thinkers, our word was questioned, are we
really ready to stand up to North Korea? So we now have a
credibility deficit in Japan that we need to be very careful
about. I think Secretary Clinton has made the right moves
initially. But how we structure the diplomacy with North Korea,
whether or not our Japanese allies think we are watching their
interests, coordinating with them, whether they think we are
making too many concessions, those will all be critical.
We have to be a bit careful about talking about
containment. I agree with Joe Nye, there is a concern among
many in Tokyo that our only concern is making sure that North
Korean nuclear capabilities don't go to terrorists and that we
would be very satisfied to just keep the nuclear weapons in
North Korea. That is a very dangerous, it is not the U.S.
policy, but it is a very dangerous line of thinking for us to
allow. So we have a lot of work to do on this, and as I said I
think the administration is off to the right start and I hope
they keep it up.
Mr. Nye. Could I just add, because Mike and I agree on most
things, to make sure that my point was clear. I was not talking
about containment pure and simple, I said containment while we
kept open the prospect of denuclearizing the Korean peninsula.
Mr. Faleomavaega. Professor Calder?
Mr. Calder. If I might just add a couple of points. First
of all, on the public diplomacy, the handling of these issues,
we are talking about the strategic side of this, and I would
agree totally with my colleagues on those points. But I think
we also have to realize we are moving into an era now when
security policy is probably going to be more politically
salient than it has been. Of course we saw this on the
abductees issue, and I agree with them on that. I think we have
to have sensitivity on the abductees issue because this is so
important to the Japanese public, and I think the Obama
administration has been taking the right course.
And the other question of architecture, five-party, I think
it really is crucial. We should in some form continue those
issues, reconstruction, possibly disarmament at some point,
refugee related questions, there are many things looming as the
Korean peninsula changes. One last thing, also minilateralism.
The United States-Japan-Korea dialogue hasn't been mentioned,
but it seems to me one thing that the Obama administration has
done that is quite valuable is reviving a process that was
quite vigorous under Secretary Perry in the last part of the
Clinton years and in some points in Bush as well, namely the
trilateral, down at Shangri La, Secretary Gates and Minister
Hamata and the Koreans. This one I think needs to be revived,
and we have particularly the North Korean issue gives us a
chance to do that.
Mr. Faleomavaega. Dr. Alexander, did you?
Mr. Alexander. No.
Mr. Faleomavaega. Professor Nye, you had indicated also
these three basic concerns about the U.S.-Japan alliance. But
don't you think there is ever a possibility that China could be
part of a trilateral arrangement in that respect, even though
China is not a democratic country at this point?
Mr. Nye. Well, I think what we are going to see is
potential for United States-China-Japan trilateral cooperation
on a number of issues. I doubt security will be the primary
one. Though notice that if you develop a five-party talks as a
northeast Asia security dialogue, this would mean a general
discussions and confidence building which would include China
and Japan. But I was thinking more concretely of the issue of
climate change. With Japan's pioneering work in energy
efficiency, and China now becoming the superpower of CO2
production, you can see a situation where the United States,
Japan, and China would have a common interest in working
together on increasing energy efficiency, particularly in the
consumption of coal in China.
China has enormous reliance on coal. It is a resource
within their sovereign boundaries. It is also one of the
dirtiest contributors. Chinese are often producing coal plants
which are not at the latest level in terms of clean use of
coal, sometimes this is affected even when the government
prefers it by local issues of corruption and so forth.
But a cooperative framework of United States, Japan, and
China working on improving energy efficiency, with particular
emphasis on coal, has a great deal of promise. So I think we
are going to see a variable geometry in East Asia. It is not
going to be a set of old 19th century alliances all on one
dimension, we are going to see some areas where we will be
competing and some where we will be cooperating.
Mr. Faleomavaega. You had indicated earlier--I am sorry. We
are also joined by another valued member of our subcommittee,
Congressman Inglis. Did you wish to make an opening statement?
Mr. Inglis. No, thank you.
Mr. Faleomavaega. All right, I appreciate your coming.
I like the way you use the phrase, Professor Nye, about
integration plus a hedge, given the example that we have in our
alliance with Japan and then with whatever other joint efforts
that we make with countries like China. What is the total GDP
that China now has as compared to the United States and with
that of Japan? I think we have $15 trillion total GDP or
something like that, with Japan right behind us.
Mr. Nye. We should let Arthur Alexander give the definitive
answer.
Mr. Alexander. I do have a chart on that.
Mr. Nye. But there is something worth noticing, before he
gives the answer, be very wary about whether the numbers you
see, whether from CIA or elsewhere, are purchasing power parity
or are at current exchange rates. It makes a huge difference,
and there is much to be suspected about the purchasing power
parity comparisons. Any time you can change something 40
percent with the click of a mouse, as the World Bank did for
China's GDP 2 years ago measured in purchasing power parity,
you know you had better look at additional measures.
Mr. Faleomavaega. I might also raise another question.
Mr. Alexander. Dispute that, sir.
Mr. Faleomavaega. Our total defense expenditure now is well
over $500 billion a year, and I don't know, somehow I keep
getting this information that Japan is second only to the
United States in terms of its budgetary allocations for its
defense structure. Is that correct?
Mr. Green. It depends on whether or not you count personnel
costs and things like that.
Mr. Faleomavaega. If you use the abacus or some other?
Mr. Green. That is right, whether, yes. It is in the top
five. But Japanese defense spending has not increased in 5
years, it has been flat or even slightly decreasing. What you
see instead as the budget remains flat is, the Japanese
Government is trying to do more with what they have got, hence
these anti-piracy operations, a new security agreement with
Australia and with India, they are making new strategic
partnerships.
Mr. Faleomavaega. I am aware of the constitutional
restrictions, but do you think at some point in time, because
Japan is a democracy, should it also have offensive
capabilities as far as its defense military structure is
concerned? You know, if you want to be a permanent member of
the Security Council, don't you think that maybe we also need
Japan's assistance militarily, peacekeeping forces and other
things being in the front line? I mean, it is very easy to
build bridges and all that, but when your lives are on the
line, then you really know if you are really giving assistance
in that respect.
Mr. Green. In the 1980s, during the Reagan administration,
as the Soviets were building up their military power in the Far
East, the United States and Japan made one of the first really
important integrating and tightening exercises in our alliance.
And we agreed that Japan would be the shield and the United
States would be the spear. And that division of roles and
missions has essentially held ever since.
But you are seeing even this week debates in the diet in
Japan about whether, maybe because of North Korea and China,
Japan ought to have some counterstrike capability, whether it
is missiles or jet fighters. I think we are going to see more
of that, and as we look at managing alliance, we are going to
have to decide on our side how we adjust our roles and missions
as Japan takes a look at a dangerous neighborhood and thinks
about perhaps having a slightly fuller kit of capabilities.
Mr. Nye. I agree with Mike on that, but I also apologize to
Arthur for having interrupted him. So he should get a chance to
answer your prior question.
Mr. Faleomavaega. There was also a perception, and as I
recall there was a tremendous debate in the Philippines about
whether we should continue to have our Navy in Subic Bay and
also forces at Clark Air Force Base. And as I recall, this was
one of the big debates in the Senate in the Philippines saying,
hey, we don't want you here because your presence is really not
to defend the Philippines but to defend Japan. Professor Nye,
can you correct me on that if that sentiment was true?
Mr. Nye. Well, again I will defer to my colleagues, but I
think there is a particular relationship between the United
States and the Philippines going back to colonial times which
raised nationalist issues about American presence. And I think
it became then a football within domestic Philippine politics.
Fortunately, that is not the case with Japan. With Japan, while
there are some complaints here and there about host nation
support and their problems in Okinawa about who bears the
burden of the noise and the congestion and so forth, by and
large American troop presence is welcomed in Japan. So I think
the analogy with the Philippines is quite different.
Mr. Faleomavaega. There is also a perception that if there
is a war, which is something that we are all trying to prevent
here, let us say North Korea, and it is believed in some
circles that if there is ever an attack, North Korea's initial
attack will be toward Japan and not toward the United States.
Is there any relevance or truth in that belief?
Mr. Green. The North Koreans have somewhere around 200
NoDong missiles which have the range to hit Japan.
Mr. Faleomavaega. But they don't have the capability to put
a nuclear weapon on that missile?
Mr. Green. Probably not yet. And then----
Mr. Rohrabacher. Yet being the operative word.
Mr. Green. Yes, exactly. And then they have roughly 11,000
missiles and artillery tubes aimed at South Korea. So it is a
bad news story for Japan and South Korea, and of course for us
because we have so many troops and civilian personnel in both
countries.
Mr. Faleomavaega. Professor Calder?
Mr. Calder. If I might just add, one question on the
Philippine analogy that you asked about.
Mr. Faleomavaega. Well, it was not an analogy. This is what
I understand was debated among the Senators.
Mr. Calder. Yes. I would agree largely with what Professor
Nye said. Historically if we look across the world, however,
when there are regime changes, when there are major political
shifts in a country where we have bases, there are major issues
that arise subsequent to that. Sometimes those nations support
it, sometimes it is Status of Forces Agreements, it could be
base rentals. In the Philippine case of course it escalated
into things that were larger in many ways, and ultimately of
course toward our leaving. But I think one does have to at
least realize that one has to think about those questions and
be prepared for the political side as, if there are political
shifts, some shifts in base relationships.
Mr. Faleomavaega. So would you say, gentlemen, that there
is consensus among our good friends here that we maintain the
umbrella that we currently have with Japan strategically and
militarily, and give absolute assurance that we will use
nuclear weapons if necessary to defend Japan. We can all talk
about hypotheticals, but maybe we shouldn't get into the
hypotheticals, and instead be realistic.
Mr. Nye. Well, that is our stated policy, and I believe it.
Mr. Faleomavaega. Yes.
Mr. Green. I may be an outlier, I would agree, yes
maintain, but I think we may need to look at ways to enhance,
this is a time in my view when we should be spending more on
missile defense, not less. And I think we are going to have
discussions in Tokyo about whether we need to rethink some of
our nuclear doctrine. There are some quite responsible people
in Japan asking whether Japan should now consider something
like what we did in the 1980s in Europe when the Soviets
deployed SS-20s and we put in our own capabilities. I am not
sure that is the right answer in the case of Japan, but there
are more and more questions in Japan about maybe how our force
posture or force structure and doctrine look given the fact
that the threat from their perspective, and they are right, is
increasing.
Mr. Faleomavaega. And I suppose in the minds of the
Japanese people and their leaders, I guess as Professor Nye had
alluded to earlier, can the U.S. be trusted when the chips are
down? I think that is the bottom line question.
Mr. Calder. Yes, I think that is right. But it is an
interactive process. Here once again we come back to the
importance of treating this alliance seriously, understanding
what is happening on the ground in Japan, and responding to it.
It isn't just something that happens automatically in terms of
their political process.
Mr. Faleomavaega. Professor Alexander, did you?
Mr. Alexander. We could go back and answer the question on
your----
Mr. Faleomavaega. Yes, the GDP. Total U.S. GDP, I think it
is $15 trillion, but I may be wrong.
Mr. Alexander. Comparing GDPs across nations as Professor
Nye says, there are a lot of problems because we measure things
in different ways, yen, dollars, euros. The appropriate way to
do it when you can get the numbers is through purchasing power
parity, because that really tells you how much stuff you are
producing, the volume of stuff. We price things out in each
country's currencies and make these comparisons.
The problem that Professor Nye alluded to with China is
that we had very old prices that were something like 15 years
old, and it took the World Bank and others several years to put
together in a massive effort a new set of prices. As he said,
overnight all of a sudden the Chinese economy looked a lot
smaller. Yet that is the correct way to do it. It turns out
that China became larger than Japan around 2000. And I say
around because the numbers don't allow us to really be finer
than that.
So Japan today is roughly, depending on whose base you use,
a third smaller than China, or China is 50 percent bigger than
Japan. India is coming up fast, but is still 30 percent smaller
than Japan. As we look to the future, Japan is number three in
terms of output. China is growing fast, as has been alluded to.
India is coming up fast. So Japan will be number three or
number four for as long as we can look out into the future. I
don't foresee a collapse of China as happened to the USSR.
India is coming up fast and could overtake Japan in say 5
years. But still Japan is going to be big, it is going to be
rich, it is going to be powerful. When I look at Japan I think
of Switzerland. Switzerland is a country with a very low growth
rate, but it is rich. If you go to Switzerland you don't get a
sense of a collapsing country, of poverty. You can't afford
most of the things. And Japan is like Switzerland but many
times bigger than Switzerland--a rich, stable, slow growing
country.
Mr. Rohrabacher. Mr. Chairman, let us note with those
figures was we are trying to cope what this means Japan, and
this is what I learned as a young boy when I lived there as two
of our panelists lived there as well, is Japan in terms of
natural resources is a very poor country. And the very basic
natural resource, which is the amount of territory and land
available to the people is limited, which should cause us to
reflect on how countries do succeed, how a country can become a
rich country.
When I lived there, the Japanese people lived in rubble,
and from the aftermath of World War II, my father did fight in
the Second World War, and let me just note that during my
lifetime my father would always come to me until the time he
passed away and say, you know the Japanese people are the
people you can trust to keep their word. And he became a
businessman after he left the Marines, and said, when you shake
hands with a Japanese businessman, you can count on it, and he
is not going to try to find little loop holes to get around the
agreement that he has made, which as a lot of other people in
that region try to do.
I think that integrity level among the Japanese and their
again striving for excellence and striving for perfection,
these elements in their culture has permitted them to succeed
with very strong limitations where they don't have energy and
they don't have land and they don't have the natural resources
that you think of as some other countries do in that area. So
we should note that and promote, knowing that if other
countries are to succeed, perhaps those are the types of things
in the future, rather than just giving away resources, foreign
aid, et cetera, we should be focusing on some of the more basic
things that permitted countries like Japan to succeed.
Mr. Faleomavaega. Professor Nye, I know you have an
airplane to catch, and we cannot thank you enough for coming
all the way here to offer us your insights and tremendous help
to the members.
Mr. Nye. Thank you, Mr. Chairman, and I am sorry to have to
leave, but it is an unfair world, while I often wait for
airlines, they never wait for me. Thank you.
Mr. Faleomavaega. Thank you again, Professor Nye.
I am sorry, Professor Alexander. When you mentioned one-
third, from a layman's point of view, can you help us with the
real numbers in terms of trillions of dollars?
Mr. Alexander. Yes. What is real?
Mr. Faleomavaega. Well, with some symbolism I think.
Mr. Alexander. I am looking at World Bank figures that I
have here for 2007. The U.S. has something like----
Mr. Faleomavaega. $19 trillion?
Mr. Alexander. More like $15 trillion.
Mr. Faleomavaega. $15 trillion.
Mr. Alexander. According to these World Bank records, this
is 2007.
Mr. Faleomavaega. Okay.
Mr. Alexander. China is less than half that, a little over
6.
Mr. Faleomavaega. $6 trillion.
Mr. Alexander. So we are talking about the Chinese economy,
even growing at the rate it is, say 10 percent a year and the
United States growing say 3 percent a year, it is going to take
10 to 11 years for China to catch up if China continues that
kind of growth rate. But, there is nothing that assures us that
it will. It is still undeveloped. It is still on the average a
poor country, although if you go to Shanghai it might not look
that way, but it is a poor country but growing very rapidly. It
has to keep together its political, its economic institutions,
it has to live with increasing pollution as has been mentioned,
that will have a negative effect over the long run. So it is
hard to say when China might catch up in absolute scale with
the United States.
Mr. Faleomavaega. I want to add on to what my good friend
from California said earlier. I think, with a sense of
amazement, how a people with no resources, a population
somewhere between 100-125 million, from rubble, developed a
democracy and to the extent now it is the second most powerful
economy in the world. And I think that really speaks well for
the industry and the creativity of the Japanese people and how
they are able to come this far or this high in terms of their
industry. And I think I could not agree with my friend from
California more in saying this.
Mr. Alexander. You have emphasized what Congressman
Rohrabacher said on this: From that rubble in the Second World
War, the thing that survived was what economists like to call
the human capital, the capabilities, the knowledge, the
technical abilities, the education, the skills and management
abilities that they had before and during the war; there was
vast physical destruction but the human capital survived, and
the habits and the institutions and the way they did things.
So with American help and with even more of their own
contributions, they started investment going, rebuilding going,
they could build on that basis that was not destroyed--the
human element and the human capital and the enormous sacrifice
and effort that they put into it. And it wasn't really much of
a surprise to economists when things then slowed down in the
1970s. They caught up with their potential. There was that
miracle, and it truly was a miracle, but when they caught up
with that potential, with the physical infrastructure, the
investment, the human capital, and they all started growing
together, we got the deceleration of growth down to this long
range trend of rich countries of about 2 percent a year.
Mr. Faleomavaega. My apologies, I am sorry. I didn't mean
not to give my good friend time for his line of questions. Mr.
Inglis, you are welcome.
Mr. Inglis. Thank you, Mr. Chairman. Actually, this ties in
exactly with what I, it may sound like an opening statement now
but it is really in the form of a question is that, what we
have just been talking about I think illustrates a wonderful
opportunity for the United States to participate with Japan in
the reinvention of energy sources. Because Japan is a country
with so little resources but yet has the human capacity to
innovate.
This is our great strength too, so it seems to me there is
a tremendous opportunity for us to collaborate and to figure
out a way to break this addiction to oil. Because what I see is
a collision course that we are on with China, we and Japan,
really the whole world is on a collision course if we are going
to continue to be dependent on oil. And so what a fabulous
opportunity for us to figure out that, we have got a lot more
resources than Japan does, and there is this false hope that
many have that we can drill in our dirt and solve our problem.
Well, we won't do it with OPEC having 70 percent of the
world's known oil reserves and us having 3 percent of the
world's known oil reserves, we really need to drill here in our
heads rather than in our dirt. Sure, we have got to drill in
the dirt in short term, but it is really not a very bright
thing to do. It doesn't take much to do it, you just stick a
pipe in the ground in the Middle East and up comes a bubbling
crude, and the people stay generally under oppression because
it enriches somebody at the top and everybody else stays sort
of poor and not very educated.
So Japan has a completely different strategy, and it is one
that I think that we should be pursuing, and what a fabulous
opportunity. So here is the question finally. You know, we are
talking cap and trade and it is very interesting that we are
here in the Subcommittee on Asia, Pacific, and Global
Environment, it is very appropriate I suppose to ask this
question here. Cap and trade, I am going to predict for you, is
in some trouble in the Senate, and may get through the House
but it won't get through the Senate.
If that happens, then what about a replacement? And the
replacement that I would love to get your comments on is this
thought of something that really can bring left and right
together, reduce payroll taxes, in an equal amount impose a tax
on carbon dioxide. It is a revenue neutral tax swap. And then
apply, this is a crucial thing for us and Japan vis-a-vis
China, apply the mixture to imported goods as well as
domestically produced goods. It is a border adjustment that we
are working to make WTO compliant.
That would make it so that then, China sort of needs to
join us at that point, needs to join countries like Japan and
the United States, it might be interested in taking this action
because it doesn't behoove them to have a downstream
application of a carbon dioxide tax when they could enjoy the
administrative efficiency of an upstream application. So,
anybody want to comment on that kind of concept?
Mr. Faleomavaega. Gentlemen, I just want to add one thing
to what my good friend is saying. We are currently having to
import over $700 billion worth of oil every year from foreign
countries, so I appreciate the gentleman's question.
Mr. Alexander. Professor Nye did comment on this, and
Professor Calder is one of the world experts on this question.
I will make a few very brief points. First, economists love the
idea of a carbon tax or carbon dioxide tax, and then giving
people back the money in payroll taxes. So you increase the
price of one thing but give the people back the money to spend
and it does everything economists would like to do.
Japan itself is one of the most energy efficient advanced
countries. It uses less energy per unit of GDP than any other
rich country, it has tremendous technology. Now the United
States has the science. Japanese science is not really up to
the mark in terms of what it needs for the future. American
science and basic research is at the forefront. So with this
combination of Japanese technology and experience, something
like a carbon tax which would give the incentive to really look
for those technologies and look for those means, I think is a
good combination. I am certainly not a politician to say how
that is going to----
Mr. Inglis. And by the way, before we hear from Dr. Calder,
in fairness to the people who are advancing cap and trade, they
would say it attaches a price to carbon and I would agree with
that. It is just that it doesn't do it in as elegant a way and
as transparent a way as what we are talking about. Besides, the
bill that I am talking about, it is Inglis, Flake, Lapinsky
Bill, is 15 pages long. As compared to I think Waxman Markey
now is over 1,000 pages. So you can do ours in 15 pages. Dr.
Calder?
Mr. Calder. I think this is a very interesting idea. I am
not familiar with the details of your proposal, so I am
hesitant to respond to it categorically, but the notion of
forcing China toward greater energy efficiency through some
kind of a competitive process it seems to me is a positive one.
It could actually help to catalyze some of the cooperation,
this trilateral cooperation that Professor Nye was talking
about.
If I might also just add on resources, as you have
mentioned and the chairman and Congressman Rohrabacher, the
lack of resources and the differences in the energy
circumstances of the United States-Japan relationship is going
to be extremely important. It is something that the Japanese
are deeply concerned about. Of course they have been very
effective in improving efficiency, they have pursued safe
applications of nuclear power, of course we haven't solved the
storage problems and so on.
But broadening the relationship to include more
consideration of energy along the lines we have discussed, you
know, all of it, alternative dimensions to oil, to me it is one
of the most important potential ways of strengthening the
alliance and also speaks to some of the security concerns that
are arising in northeast Asia as well. I think it is definitely
a win-win area and we need to think much more seriously about
specific proposals.
Mr. Inglis. Yes.
Mr. Green. As you probably know, Congressman, the Japanese
Government has committed to Kyoto, to cap and trade, they just
announced very ambitious targets, and they have introduced an
experimental emission trading scheme that, since there is no
cap is kind of a game, but just to see how they would trade
emission credits. I have actually talked to a number of
Japanese CEOs and executives, it is a project I am working on
and I have been interested in their views, privately they all
would prefer a green tax.
And the reason they say, it is because they don't want in
their case the Japanese bureaucrats meddling or the diet or
others getting involved. I mean the 15 pages versus 1,000 pages
would really resonate with a lot of Japanese company
executives. But it is not where the government is, the
government is moving ahead with cap and trade scheme. I would
also, I think we need to look more seriously at what we can do
with Japan on this.
Japan I think it actually is the most energy efficient
country in the OECD by quite a significant margin, and I have
been watching the new Energy Department leadership and others
talk about what they want to do in Asia, and they have very
ambitious and impressive plans for cooperation with China and
dialogue. I have yet to hear anything of any significance from
the White House or State or DOE on what they want to do with
Japan, which has all of these enormous capabilities that would
really help us help China work through their problems. So I am
glad you asked the question because, I don't mean this as a
criticism, the action is with China in many ways, but people
are forgetting how much Japan has to offer in cooperation with
us to get that done.
Mr. Inglis. And, Mr. Chairman, if I could just extend a
little bit longer just to say this, that another challenge of
cap and trade is the uncertainty of the price of the credits.
And so I would think that a reason that some of those CEOs may
be more interested in a clear and transparent tax is then you
can see the line of taxation, you can see what rate it is going
to be, and you can predict the point at which your new
technology can defeat the incumbent technology. As it is with
cap and trade, the price of the credits will fluctuate, so when
do you bring the plug-in hybrid to market? Well, it is a big
question.
But if you have a revenue neutral tax swap and you can see
the trajectory of that tax line which we propose to start at
$15 a ton and end over 30 years at $100 a ton, then you know
the point at which you can compete. And it gives certainty to
the marketplace. And I think that is an advantage that business
types see and frankly I think that a lot in the political world
have sort of fallen in love with the concept of the girl rather
than the girl when it comes to cap and trade. They really want
a girlfriend, they want to believe in this concept of
girlfriend, but if they really take a look at her.
Mr. Faleomavaega. It depends if the girl is good looking.
Mr. Inglis. I think what they can look at there, is that
when they see cap and trade with all of her warts, they are
going to say, Gee she isn't quite as beautiful as we thought
she was. But we will see as this process goes on. I hope though
that we can work in a cooperative way with our partners like
Japan to produce something that is very clear, very workable,
that doesn't punish trade, but rather applies it equally to
imported and domestically produced goods and that works here in
the United States on both the left and the right.
The two people that are very big on this concept that I am
talking about here are Art Laffer, Ronald Reagan's economics
adviser, and Al Gore. And so that is a broad spectrum. They may
actually have gotten together in Nashville where they both live
and talked about this concept, and it is pretty exciting when
you can get people that divergent together in saying, gee we
can work together on this. So thank you, Mr. Chairman, for the
opportunity.
Mr. Faleomavaega. No problem. I guess on the issue of
climate change and global warming and with implications on
energy resources, the major issue that is now being debated and
discussed even in the Congress at this point in time, I guess
it will come down really to three countries that will have to
take the lead on this whole question of what my friend was
saying--India, China and the United States.
With Japan, I would say we should follow the lead that
Japan has taken with its initiatives in addressing some of
these environmental problems coming out as a result of what we
are faced with, as my friend from Illinois would say, man-made
pollution.
One other issue that I wanted to share with you gentlemen
concerns nuclear waste. For years this exchange has been going
on between France and Japan, and most recently there was a
shipment of MOX, a kind of a nuclear oxide. It is very, very
lethal, and a shipment was sent from France going around the
Cape of Good Hope in Africa through the Indian Ocean through
southeast Asia all the way up to Japan. The amount of this MOX
was sufficient to build 200 nuclear weapons. It is the biggest
shipment ever. Do you think that Japan and France should
continue to make these kinds of shipments?
If something happens, let us say due to pirates or some
accident, realizing people say, ``Well these things don't
happen.'' Well we said the same thing about the Valdez in
Alaska regarding the oil spill there. I am very concerned. We
can't even figure out how we are going to get rid of our
nuclear waste. Of course Yucca Mountain in Nevada was the
chosen state.
And to this day not one ounce of nuclear waste has been
shipped to Nevada, because here is the question--whose states,
whose towns, whose cities are going to be traveled through
whether by truck, by train, by airplane or whatever, that will
eventually end up in Nevada? Nevada doesn't want it. And it
seems to me if you are going to produce electricity as a result
of using nuclear energy, don't you think that a given country
or state should store its own nuclear waste? Well, do you think
it is right that Japan and France continue to do this? Dr.
Calder?
Mr. Calder. Just very briefly, the one thing I could add on
that point is of course domestic reprocessing is one way to
reduce this. I agree with you that it is dangerous and should
be reduced or eliminated. Over time, I think the Japanese plans
certainly are to stop this kind of transfer, but then to do a
domestic reprocessing within Japan itself.
Mr. Faleomavaega. Dr. Green?
Mr. Green. For the reasons that Kent just said, I think it
is appropriate Japan and France are doing this because the aim
is to create a cycle that would be sustainable and reduce
dependence on fossil fuels and other things. And the security
is good. I would add one footnote though, since you raised it,
and this is getting in the weeds, I apologize, but there is a
new organization being formed by the Nuclear Threat Initiative
called WINDS, which is I think the World Institute for Nuclear
Security.
Mr. Faleomavaega. By Senator Sam Nunn?
Mr. Green. That group. And they are very keen to have Japan
be a core member. And the purpose of this group is to have
government and business come together and improve security for
nuclear power plants for these kinds of shipments. Japan hasn't
joined yet, and they should. And it is not for any substantive
reasons, it is just bureaucratic wrangling in Tokyo. So there
are things, for the concerns you raised, Congressman, there are
reasons why Japan really needs to step up and show it is taking
security of nuclear fuel and facilities more seriously. It is
good, but it is probably not good enough in the age we live in.
Mr. Faleomavaega. Dr. Calder?
Mr. Calder. If I might add just one point, I think the
issues that we are talking about here show exactly why a United
States-Japan bilateral energy dialogue, we have had these as
Mike said with China, with Korea, with all sorts of other
countries, we don't have a bilateral energy dialogue with
Japan. In some form or other, it does seem to me that that is
important, because often our views can help to provide the kind
of important input into Japanese decision making on exactly the
kind of issues he is talking about.
Mr. Faleomavaega. I don't know if this question was
answered, but for the record I am going to restate it since
maybe I didn't state the question properly. We all know that
under Japan's constitution the whole framework of its defense
structure is strictly to defend the country, not to take
offensive means to attack another country. We all understand
that. But given the realities of the world that we now live in,
do you think that it is time that Japan needs to change that,
that its military should take a more offensive posture in terms
of being an active participant like other countries that
conduct peacekeeping operations under the auspices of the
United Nations?
If you really want to be a real participant, you have got
to be willing to spill your blood too in the process. Anybody
can print money, but to bring somebody back after being killed,
it is nothing like that. We all know the realities of that. But
Japan is a democracy, Japan has all the military capabilities
like any other, with an economy second only to the United
States. Should Japan's military be more offensive in its
operations in concert with whatever alliance agreements or
whatever operations with the United States or even with United
Nations peacekeeping forces, whether it be in the Middle East
or other troubled areas of the world?
Mr. Green. I recently had the privilege of speaking to the
Japanese National Defense Academy, and these young men and
women were eager to demonstrate that Japan could carry its full
burden in international society, and I think you find among
diet members, almost regardless of party, that diet members in
their 30's and 40's and 50's feel strongly the same way. So I
think the trend, perhaps incrementally, but the trend is going
to be toward Japan doing more. For example this new law that
passed on anti-piracy, which is really quite significant in
many ways because it allows the use of force to save other
ships, not just Japanese ships.
So there is movement in that direction. I think there
should be more movement. I think that it is unfortunate that
Japan has only several dozen peacekeepers abroad right now
doing U.N. peacekeeping operations when China has thousands.
Whether or how those constraints are lifted and Japan plays
that larger role really is up to the Japanese people. It is a
democracy, and I am personally quite confident that as these
issues of the constitution or collective defense are addressed,
it will be transparent and it will be for the right reasons.
And it is not really for us in many ways to say. The question
of offensive capabilities is a little bit different.
And for our entire alliance the United States has had the
responsibility for taking the fight to the enemy if there is a
threat to Japan. As I said earlier, there are debates in Japan
about whether Japan ought to have a little bit of that
capability themselves. If there is an operational reason, if it
strengthens defense, deterrents, dissuasion, makes Asia more
stable, in my view we ought to consider it, we ought to talk
about how we do that in the alliance. If it is just for the
sake of having offensive capabilities, perhaps it doesn't make
as much sense. But I do think that is going to be an area where
this administration and subsequent ones are going to have to
talk to our Japanese allies about how we define our roles and
missions.
Mr. Faleomavaega. Dr. Calder?
Mr. Calder. I think there are two additional points that
have to be made. First of all, the issue of interoperability
and cooperation with the United States. I think those are both
quite fundamental. For us the most important change I would say
is some change in the understanding of collective self defense,
so that Japan could cooperate more flexibly with our forces.
Interoperability is another element.
The second point, I think Japanese transformation of their
defense capabilities, it is for the Japanese people to decide,
but they are divided internally, and particularly given the
tangents in the region and history, there is a possibility that
Japan could go further than would be stable for the region as a
whole I think. And so from that perspective, some appreciation,
not any direct intervention on our part, but respect for the
other tradition in Japan, of namely the sufferings that
Japanese people went through in relationship to the war and so
on, I think somewhere in a nuanced way, that also has to be a
piece of our approach since these issues are going to be quite
debated domestically in Japan.
Mr. Alexander. Just one quick issue here. I was doing some
research on the use of civilian technology in Japan for defense
purposes and wanted to talk to companies like Sharp about LCD
displays; they wouldn't talk to me because I wanted to talk
about potential military uses. The company at first flatly
refused to speak to me. After a lot of cajoling and discussion,
they finally did it, but at a restaurant. Finally it looked as
though I was okay, and we had meetings at their corporate
headquarters.
But it was an indicator to me, it was not only Sharp but
Sony, other companies as well, about how strong some of these
ideas written into the constitution are among the Japanese
public. And I was actually quite surprised that as much as we
know has gone on in the developments in the political military
sphere, still among the people and among corporate leaders,
these feelings of the pacifist constitution are still very
powerful.
Mr. Faleomavaega. Dr. Calder, you had indicated earlier in
your statement that you say that Japan is changing, is not
static. I consider the changes going on with the two major
parties and the ups and downs no different from our own
political system. But there seems to be concern in some circles
saying that Japan is going down the drain because its politics
have become so bad. And I don't know, after going through with
our own sense of politicking the last 20 years, I certainly
wouldn't say this is a point of admiration in our own political
system as the pendulum swung from one end to the other. Can you
elaborate a little? I would like to think of it more
positively: The up and coming Democratic Party versus the
Liberal Democratic Party, I think is great.
Mr. Calder. Well, you present an extremely important
question. On the face of it, it does seem to me there is no big
difference between the ups and downs that we have and possibly
two-party competitive politics, which in the longer run I think
Japan is headed for. But the important contrast, and I think
the key point, is that this pattern would be sharply different
from the past 50 years of Japanese politics, which has
fundamentally been one-party dominance, preeminent role for the
bureaucracy, not a great deal of debate on security issues.
But particularly in the context of a security system, which
is somewhat unusual in comparative perspective. We have the
peace constitution; we have all kinds of constraints on
deployment of forces, and so on. So that the shift is not in a
sense totally parallel to what would be the case here because
there is a different embedded history. I think what that means,
the bottom line, and fortunately the Japanese people I think
are becoming more and more sophisticated and sensitive on
security issues, is again, it is a very interactive American
diplomacy with Japan including and on-the-ground element, the
embassy, the consulates, the American centers I think are going
to be much more important in the future.
Because security with two parties and the kind of debates,
you know, that more transparent than we have here, is probably
what will begin to emerge more in Japan. And presenting the
American point of view not only to bureaucrats or not just
dealing with things behind doors, you know, between the
ministries or at the White House level, but also dealing with
the public side of this, I think that is really the big change
that is going to occur. That is why the focus of a lot of my
testimony has to do with public diplomacy and the way that we
are organized and what we do on the ground in Japan.
Mr. Faleomavaega. Whose phone is that? Turn off your cell
phone please. Somebody's cell phone is on.
Nine thousand9,000 deg. Marines are going to leave
Okinawa with about a $15 billion price tag on it in terms of
transferring the Marines to Guam with some 20,000 dependents.
We have Members of Congress who say, enough is enough, why
should we continue having military forces in other countries?
Why don't we just bring our soldiers back home whether it be in
Europe or the 50,000 in Japan? Why should we continue having
50,000 soldiers in Japan? Do we need our soldiers there? Japan
is capable of defending itself, are they not?
Mr. Green. Of course, Members of Congress, the American
public have been asking those questions since 1945, whether we
have to have so many troops abroad, and the numbers have come
down considerably over the past 60 or 70 years. The answer in
the region is, absolutely they have to be there. We recently
did a survey at our institute of strategic elites in nine Asian
countries, and they in spite of economic integration, in spite
of increasing summits and cooperative efforts, they
fundamentally do not trust security in the region absent the
American presence. And that goes for Japan, Korea, Australia.
Mr. Faleomavaega. And why is that?
Mr. Green. Well, part of it is we are, as Secretary
Madeline Albright once said, the indispensable power. We are
the onus broker. Relations among Asian states are complex; in
most cases they have better relations with us than they do with
their neighbors, so that is part of it. Part of it is because
they are focused on economic growth. Success for a leader in
China, Korea, Thailand, anywhere except basically Burma and
North Korea, depends on providing growth and opportunities for
their people.
And they can't do that if they have to start looking over
their shoulders and worrying about a possible war with their
neighbors. So they want to keep focused on economic growth
which is good for everyone. And then of course you have all
these big, big questions. What is China going to do with its
increasing power? What is North Korea going to do with its
nuclear weapons?
So for a pretty small investment at the end of the day, we
buy ourselves stability in the region, access for economic
relations, good will frankly in spite of some of the issues
around local bases. And we manage the changing power dynamics
in a way that means we can, you know, live up to Joe Nye's
strategy of integrating China and not having to worry as much
about the hedging piece of the equation.
Mr. Faleomavaega. Professor Calder?
Mr. Calder. I agree with that very much. I do think our
foreign deployment is important and its role goes far beyond
the military. One could add as well the humanitarian side of
this. For example the tsunami in 2005, the United States was
the only, by far the first nation and the main nation that
responded to that tragedy across the Indian Ocean because of
its global presence. So it is a diplomatic role, it is
military, of course in an age of terrorism we can't forget that
aspect of it. But it goes really far beyond that. That said,
having just done a book in that area, I do think that it is
politically contingent. We have to be sensitive to the local
politics in the key countries, and that includes Japan, in
thinking about the stability of our basing network.
Mr. Green. I should add briefly if I could, the one other
reason it is a good deal for us, frankly, is because our
Japanese and Korean allies pay billions and billions of dollars
a year, and if you did the math it would be a lot more
expensive for us to actually station them at home. That is how
much they value our presence, and Kent is right, there are
challenges at the local level with bases, but there is no
ground swell in Japan or Korea for us to go home. I think there
is a pretty broad consensus at a national level that our
presence is critical for their national interest as well.
Mr. Faleomavaega. And if our presence really has the right
decision or the right reasons for it, we paid a dear price in
Vietnam. For 10 years we couldn't even figure out what our
foreign policy should have been, at the cost of almost 60,000
lives of our men and women in uniform. That was not a very
pleasant experience for me as a veteran who served in Vietnam.
And it seems that we didn't learn our lesson from Vietnam, and
look what we have done in Iraq.
We have expended over $900 billion supposedly to go after
Saddam Hussein who never attacked us in 9/11. So we have got
some real serious problems here--and I say at least in our
relationship with Japan overall from your testimonies,
gentlemen, the relationship is sound. I deeply appreciate your
coming and sharing with us and with the American public. I
don't know how far this television broadcast is going, but I
hope we have given better insight, better understanding, and
helped better relations between our two countries. And with
that, gentlemen, thank you again for coming. The hearing is
adjourned.
[Whereupon, at 12:21 p.m., the subcommittee was adjourned.]
A P P E N D I X
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